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December 18, 2014

Federal Report Says IRS Falling Short on Charity Oversight

With its budget falling and its workforce shrinking, the Internal Revenue Service lacks the resources to go after suspect charities or sufficiently assist state regulators of nonprofits, the Tampa Bay Times writes, citing a report released Wednesday by a federal watchdog agency.

The U.S. Government Accountability Office found that audits of tax-exempt groups have declined along with staff and spending at the IRS' nonprofits unit. Only 0.7 percent of filing charities' tax returns are being reviewed, lower than the rate for individual taxpayers and half that of corporations.

The GAO recommended that Congress require more charities to file their returns electronically, cutting down on labor for the IRS. The report was requested by Oklahoma Sen. Tom Coburn after an investigation by the Florida newspaper and the Center for Public Integrity highlighted lax regulation that allowed some groups to spend virtually all their revenue on fundraising year after year.